CRYPTO MOVERS AND PRICES
Crypto was broadly selling off this morning with alt-coins posting the most aggressive losses. Spot volumes remain below the 30-day average.
Crypto Story of the Day
Over the past several weeks, price correlation in crypto markets has increased. The metric suggests that despite steps taken toward the practical adoption of BTC, crypto networks remain undifferentiated by most investors.
The 30-day rolling correlation between BTC and ETH reached 0.92, the highest point for the metric since October 2020. A 360-day rolling correlation between the 2 assets began increasing in mid-May, from 0.67 to a current 0.71.
The correlation between BTC’s average daily price and that of other assets has also increased in the past several weeks. For example, BTC and Ripple (XRP) saw a correlation of 0.83 over the past 30 days, compared to 0.02 over the past year. Similarly, the correlation of BTC to DOGE over the past 30 days equals 0.91, compared to 0.57 over the past year.
The aggregate crypto market cap lost an estimated USD 1.1 trillion between May 10-23. Several DeFi tokens lost in excess of 50% of their market caps during the May selloff. UniSwap’s UNI, for example, saw its market cap diminish from a high of USD 23 billion to USD 8 billion in a span of 8 days.
Google search data for the term “cryptocurrency” over the past 30 days indicates that the most common related queries focused on China’s perceived crypto “ban” along with environmental concerns over BTC mining.
Ahead of Elon Musk’s tweet regarding Tesla suspending BTC payments due to its perceived environmental cost on May 12, ETH was trading at new record highs of about USD 4,300. In the following week, ETH’s market cap lost as much as USD 233 billion.
BTC and the broader crypto market’s 2021 performance has been characterized as driven by the space’s mainstream adoption. Examples include El Salvador recognizing BTC as legal tender, Tesla purchasing BTC as a treasury asset, and Visa piloting settlements in USDC via Ethereum.
However, despite examples of varying degrees of practical uptake, the increase in correlation between assets as diverse as DOGE, ETH, XRP, and BTC suggests that adoption hasn’t been accompanied by a more sophisticated differentiation between usage metrics and technical maturity of varying blockchains and their associated assets.